A hedge fund might be blowing up the economy. Sure, there are real pricing swings based on expectation of the upcoming financial crisis, but the dramatic nature of the swings and the frequency of them is, well, unusual when it comes to being organic.
Long Term Capital Management, among other things, was brought down by a convergence trade strategy gone wrong: The idea to short the expensive on-the-run treasurys and buy the cheaper off-the-run treasurys and wait for them to converge made sense as a low-risk thing to do, even if there wasn’t a lot of money in it. By using a lot of leverage, they could boost the return on something that seemed so safe.
That whole thing blew up when people wanted the safest, most-liquid thing around (i.e. on-the-run treasurys) to the detriment of everything else. That hurt LTCM really bad as the spread grew wider instead of converging.
Let’s look at the 2-year treasury now and the 10-year treasury.
You should need encouragement to lock your money up for longer. Therefore, the yield on the 10-year should be greater than the yield on the 2-year. Historically, that’s the way it’s been:
But that’s not the sitch now, as you see in the chart above. Since July 2022, the spread has flipped. It’s now more lucrative to buy the 2-year than it is to buy the 10-year. You have a disincentive to buy the 10-year just in terms of the yield.
And the spread is more than 50 basis points. Yes, there has been a slight move toward convergence, but this is still out of wack.
It could be a convergence trade a fund has done that has gone horribly, horribly awry–and even more so if it’s a highly levered trade. It could be that they have had to vacate all kinds of short and long positions to meet margin calls. That would explain wild fluctuations in prices of things across sectors and the quick subsequent rebounds.
The economy may still be screwed. But could it be that a hedge fund has blown up in a really bad way and the rest of us just don’t know it yet?
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
First off, today’s trading was whaaaaaattttttt. Low volume and big drops. We haven’t restarted the 10 day streak, but after close, the stock price drifted back up to about 88c in normally meaningless after hours trading.
I have the same feeling from my prior post: This makes absolutely no sense to me. Really, zero sense.
I did a cursory search to see if there’s any hedge fund manager by that name in Texas. No dice.
I did a search of all text on EDGAR since 2001 for different permutations of TODD STEWART COX. The only time this guy shows up is from today’s filings.
The best I could come up with is that he’s an elder in his church and is involved with Sacred Selections adoption agency(?) that promotes adoption as an alternative to abortion.
Is he pro-contraceptives? Is that why he’s taken a 9.29% chunk of Evofem? Does Evofem’s tech qualify to Todd Cox as something worth promoting? Is he just a businessman who identifies Evofem as the next big thing and feels like he might as well make even more money?
I do not have answers.
My hope is that he’s just a dude who is in favor of what Evofem is doing. I can’t imagine that he bought millions of shares just to watch the company go belly-up.
I just find it bizarre that a virtually unknown would take such a large stake.
Meanwhile, today I averaged down from 90c/share to 89c/share.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
I saw an update today on Fidelity’s ATP that purports to be from a Morgan Stanley analyst: “Morgan Stanley Maintains Underweight on Evofem Biosciences, Lowers Price Target to $0.75.”
This makes absolutely no sense to me. Really, zero sense.
As I’ve posted over and over, I believe this stock is worth $1+ or $0. Nothing in between. I would expect a Morgan Stanley analyst to do at least some cursory research before forming an opinion. I don’t know how anyone who is aware that delisting in the case of Evofem may bankrupt the company and who most certainly would know that maintaining a price below $1 would ultimately get the company delisted would provide a price target of less than a dollar.
My opinion is that either Jeff Hung, Morgan Stanley research analyst and graduate of MIT, Yale, and Johns Hopkins, doesn’t know how to read filings and then have thoughts or that it’s not a real Jeff Hung of Morgan Stanley release.
If this isn’t real, it reeks of illegal short-and-distort as part of greater stock price manipulation. If it is real, stock analyst sounds like the easiest job in the world. And one Jeff Hung certainly didn’t need a degree in nuclear engineering to do.
Evofem was two days away from reestablishing compliance with the Nasdaq’s price requirement, as yesterday was Day 8 of the 10 consecutive needed. Now the day count resets. Disappointing, sure, but it starts over on Monday and with more people aware of this company. I like the odds that Evofem survives.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
Again, not at all asserting he’s part of an illegal short and distort campaign. I do think he’s wrong, though.
ICYW how someone with such a small following could possibly have any impact on a larger level, social sentiment, S-Score, is now a metric available to retail. I find it hard to imagine it’s not part of many automated trading algorithms.
The S-Score is a normalized representation of social media sentiment over a lookback period. The S-Score measures the deviation of changes in sentiment intensity of a given stock. The S-Score answers the question, “Is the conversation on Twitter about a particular stock significantly more positive or negative than normal?” Higher levels of sentiment indicate a stronger reaction. High positive sentiment indicates a security is statistically likely to move higher. High negative sentiment indicates the security is statistically likely to go lower.
The more negativity out there, the more it shows up in this chart.
I expect the tweets to be purged again this evening lol.
Shameless self-promotion
Dominic Raab is in the news again. He is not related to me, and he’s an embarrassment to the Raab name and should change it to stop making me have to clarify that he’s not part of my family.
But you can benefit from his idiocy! Get 22% off #raabidfun T-shirts at shop.raabidfun.com now through the end of the week. Just use promo code NOTDOM22.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
I now get google alerts for EVFM and Evofem. Today’s alerts included a GuruFocus post that was just a repost of the press release Evofem Strengthens Phexxi® Intellectual Property with New Composition of Matter Patent From USPTO. I mean the press release is from June 30, but my perspective is that it’s better that more people know about the good stuff Evofem is doing. So wtg, GuruFocus.
As we enter this new week, I expect a massive downward push on the stock price. I also expect the volume to be substantially greater than Friday’s 61m+ shares traded. There’s a real possibility it gets pressed to below $1, which I wouldn’t entirely mind because I have four limit orders to scoop up more shares at prices ranging from just under $1 to $0.86. My average is about $0.88, and I wouldn’t be opposed to averaging up, but I would prefer that bears didn’t gain momentum.
What a pretty chart!
I think at minimum, we’ll see a strong push to keep the stock price out of the money for this Friday’s $1.50 options, and a gamma squeeze may be why the bears are extra trying to protect the stock from hitting $1.50.
Update on twitter user @joey88walsh: He deleted the tweet I’d embedded in Friday’s last post (“$EVFM REJECTED 1.4$ again!! Man this things trash and weak… and even with all that fake hype”). I think it’s so odd that someone just does a daily purge of tweets other than sports, war, and politics posts. And while he has 62 tweets now, I’d be surprised if he hasn’t deleted triple that just in EVFM-related noise. I’m not asserting that the negativity is done in bad faith and just to influence the social sentiment score of Evofem.
The S-Score is a normalized representation of social media sentiment over a lookback period. The S-Score measures the deviation of changes in sentiment intensity of a given stock. The S-Score answers the question, “Is the conversation on Twitter about a particular stock significantly more positive or negative than normal?” Higher levels of sentiment indicate a stronger reaction. High positive sentiment indicates a security is statistically likely to move higher. High negative sentiment indicates the security is statistically likely to go lower.
In unrelated news, if someone were to attempt to employ a short and distort strategy, what would that look like on twitter?
Again, I only called @joey88walsh out because he replied to a tweet of mine with something to the effect of “the shorts run this stock lad,” (also deleted)–wasn’t formatted like tweets generally are within WordPress. After quick investigation, I saw that the doubty tweet had been deleted. I found the rest of what I consider suspicious after the deletion of the other embedded tweet.
Four days down, and six to go. I maintain that if Monday turns out to be Day 5 of the 10, the bears will only press harder. And I see each penny they use to keep the stock price down as another vote of confidence in the prospects for Evofem.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
It was a slow day overall with a lot of barcoding. You know, the thing where the trades between the same upper bound and lower bound values and then looks like a barcode when the candlesticks are plotted over time.
Rather than a stock price stabilization, there were periods where blocks of stock in excess of 100,000 shares were offered a price that looked to protect the stock from hitting $1.50.
Now, when I went to relink to the post from the other day when the price went beyond $1.50, I saw that the embedded tweet from @joey88walsh–who I only called out because he replied to a tweet of mine with something to the effect of “the shorts run this stock lad,” (also deleted)–wasn’t formatted like tweets generally are within WordPress. After quick, investigation, I saw that the doubty tweet had been deleted. But that’s OK because the guy has posted new ones that are just as insightful. Like this one:
Some people don’t like to preserve their wrongness for eternity/posterity. I understand that. On the other hand, I go into depth in these blog posts with my thoughts. If it turns out I’m wrong, I’ll get to reflect on how I got it wrong. And then try to get better. And anyone who reads it later will be like: “Oh this dude was so wrong. What a dummy.”
So far what I’ve written looks pretty good and is supported by what’s transpired.
The barcoding was pretty much all of the last two hours.
In the waning moments of the week, there was the same flurry of activity that t
3:47:26 PM ET: 115,874 shares at a high of $1.33 and a low of $1.32 3:52:44 PM ET: 92,981 shares at a high of $1.33 and a low of $1.32 3:59:35 PM ET: 151,298 shares at a high of $1.33 and a low of $1.315 3:59:41 PM ET: 152,499 shares at a high of $1.335 and a low of $1.3211
The final trade of the day was 173,168 shares at $1.35.
Four days down, six to go. I imagine the bears will push harder the closer it gets to 10 consecutive days of closing at or above $1. If they force it down to below $1, I’ll be ready to scoop up more shares. And I don’t expect it to close below $1 next week.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
I first bought Big 5 Sporting Goods back in December 2021. And I’ve bought several dips since.
My view of BGFV is that it’s great. I am confused at the massive short position, and I haven’t found a good explanation for it.
My experience throughout my life about Big 5 is that the products aren’t as good as what you’d find at Sport Chalet or Sportmart. The draw of Big 5 was that it was nearby and good enough for some things, I guess.
My family isn’t and hasn’t been into guns offered by Big 5, but we’d certainly see them and other products in the fliers that Big 5 sent out.
Are the deals really spectacular? I don’t know!
The thing that I remember most vividly about Big 5 Sporting Goods from my childhood is the shoe department. Or area. Or whatever.
It wasn’t massive aisles of boxes like at Sportmart or a nice area like at Sport Chalet where there were shoes on display and salespeople who brought you your size. Rather, it was a wall of shoes like normal plus some low shelves with kinda random boxes. But the prize was the table piled high with mismatched footwear. Mismatched because the shoes were bound together, but frequently the mated shoes were different sizes.
Throughout the years, I wondered how Big 5 stores continued to operate when there were plenty of good options out there.
I found myself going to Big 5 to get a wooden Louisville Slugger for $25 or some baseballs or golf balls. Once I got a driver there because the one that had come with my starter set of golf clubs wasn’t great. But after hitting a few balls at the range, the head came off. It also made a weird sound. I returned it.
Later, I bought some weights at Big 5 because the prices were fine, and weights are weights. Not much complexity.
I wanted to get some 10# plates, but they only had 5# and 2.5# plates. I got four 5# plates instead of two 10# plates. As I stood in line in the store cluttered with items that had been delivered but not yet put on shelves, I wondered why I’d gone to such a lame store. Then I realized that I was in line. Behind seven people. Why was any of us there? Selection? No. Store design? No. Prices? I don’t know if it was enough to make a difference. Convenience? That had to be it. Or maybe it was a supernatural draw. Like the name. Big 5. Not as funny as Dick’s, but that was OK because I hadn’t heard of Dick’s yet.
Sport Chalet closed in 2016 after filing for Chapter 7 bankruptcy protection, which is the one where pretty nobody who is owed money gets anything and the company is dead. Sportmart was purchased in 1997, and the name disappeared in favor of Sports Authority–a brand then-unfamiliar to this Los Angeles kid–in 2005. And then in spectacular fashion, Sports Authority also closed in 2016 after filing for Chapter 7 bankruptcy protection.
Big 5 avoided that somehow, which I also found to be strange. Like, why?
Now, switching from bewildered consumer perspective to admittedly equally bewildered investor perspective, all that’s changed is my belief in the company’s ability to survive.
In October 2021, I started to look to see if there was any reason to buy BGFV. I thought I might as well buy some shares because the dividend looked pretty good, but I got sidetracked and was focused more on my Devon Energy shares anyway. So I was on the sidelines watching as the stock doubled in price in November.
On its way down in December, I started to pick it up. There was a cycle of: It drops down to $17 and goes back to $19 or goes to $16 then back to $19. Over and over. Weird, sure. So I bought dip after dip.
There were two convincers for me: Reading the financial statements and seeing how much of the company is shorted.
In the financial statements, Big 5 basically describes itself as a company that takes opportunities to relieve other merchants of dead inventory and provides them to consumers who have low expectations. The low expectations part is my inference from the text combined with my own surprisingly (to myself) numerous experiences going to different Big 5 locations never finding the store layout or design or lighting to give me high hopes. And the only time I’ve been disappointed enough to take action was with that poorly made golf club. Everything else has been good enough.
Here it is in their words. See if you get the same message.
We believe we enjoy significant advantages in making opportunistic buys of vendor over-stock and close-out merchandise because of our strong vendor relationships, purchasing volume and rapid decision-making process. Our strong vendor relationships and purchasing volume also enable us to purchase merchandise produced exclusively for us under a manufacturer’s brand name which allows us to differentiate our product selection from competition, obtain volume pricing discounts from vendors and offer unique value to our customers. Our advertising highlights our opportunistic buys together with merchandise produced exclusively for us in order to reinforce our reputation as a retailer that offers attractive values to our customers.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
I see this as a continuing sign of running scared.
And it’s cheaper for bears to try to convince those who are uncertain of Evofem’s ability to survive than to borrow on their own and short.
But I don’t see this trend continuing through the end of the day.
Now, all that matters to me is that at the end of the day, the stock price is at or above $1. If that happens today, it’ll be day 4 of the 10 consecutive needed to get Evofem back in compliance with the Nasdaq pricing rules.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
It’s a little after midnight on the West Coast. The pre-pre-market trading hasn’t yet started.
Yesterday’s close at $1.25 and pretty much meaningless after hours decline of a penny means only one thing to me: It’s above a buck. I just care that it’s at least a buck.
My expectation from today is that the bears will go HAM at pushing the stock price down. And a major push to get it under $1. Going into the weekend on a four-day streak is way worse for them than going into the weekend with a no-day-streak is.
Kinda for fun and kinda because if it hits this low, I’m happy to pick up the shares, I put a limit order in at $0.85.
Given on the content I’ve written about Evofem, I have been asked if I am redditor mccharming88. If my writing style is not indicative enough to the contrary, rest assured that I am not redditor mccharming88. All I write are my assumptions and opinions that I base off behaviors, trends, and my own research and experience to complement independently verifiable facts from reputable sources. I do not give investment advice, and I do encourage everyone to raise relevant points that are in conflict with my perspective. Or if there are holes in my knowledge that can be patched if only I knew where to look. If you, reader, identify areas that need improvement, please share in the comments section.
Disclaimer: None of this is investment advice. The logic here may be bad and should not be relied upon. My assumptions may be bad and should not be relied upon. This post reflects my opinion. I may hold positions in securities I write about, and I believe in what I write.
There seems to be a fear of $1.50. It could be that closing at $1.50 would trigger a margin call.
But the activity in the final two hours really pushed that price down.
2:44-2:45pm ET there were 2.4 million shares traded with a max price of $1.37 and min price of $1.265. The volume spike was at 2:45:46 with 568,241 shares.
In my view, this is a positive result. Short borrowing fee is still about 200%. It could be that redditors and folks who found Evofem on the twitterverse and panic sell because they think that this guy is right:
I might agree if I hadn’t done any reading into the company–even if I hadn’t published why I think this stock is being manipulated downward. It’s unlikely that I would agree, though, because there is just so much downward push on this stock and so much resistance to that push that I would have felt as I do now: The sentiment in this tweet is absolutely adorable.
As I’ve maintained since the beginning: The number that matters to me is the close price at or above $1. Today qualifies. With the bonus that it can’t be fun to borrow at a higher price.
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